Brokerage Houses – Deep Pockets Are Mandatory
QUESTION:
Dear Marty!
Hats off on the call about the Franc. It’s amazing what Socrates and the work of all you at Princeton Economics is doing, to all of you my deep respect. And I thank God that knowledge is in good hands!
Now here’s the thing, as I read about the crash of the Forex retailers I just can’t believe how stupid those people can be, they lost millions, a few are about to shut down and others are being bailed out with loans. if they’d really care about their customers they should have prevented them about the imminent possibility of move by the Swiss as you did for several days and they could have avoided the losses. It’s like they are always looking for someone to take the punch by hiding facts to the common audience. I’m about to get into the Forex, I like how the market works and I have been preparing for it now for a while, so I recently opened an account with one of the brokers that just got bailed with a few million $ loan, however I have not deposit funds yet into the account, and Marty honestly now I believe I’ll think twice what platform to use since this pile is obviously very full of crocodiles, as usual.
Any recommendation for when it comes to identify the virtues of a good brokerage firm suitable for the individual investor?? Is there even such a thing like that nowadays??
Thanks Marty, Blessings and Happiness.
J
ANSWER: I owned two brokerages houses in my life. Sold one to the Australians and was preparing to take the second one public since I had to buy it after the Japanese government called and asked me bailout a French bank’s brokerage in Tokyo. I never liked the business for risk was undefinable. We had a client blow up in Japan and I had to write a check for $10 million. So it is not that the brokerage houses are dishonest, it s that they wear their own risks as well as those of their clients on big moves like this. A 30% move wiped out every account trading Swiss on the wrong side. If the client does have that kind of cash, the brokerage house wears the loss. So you can have a honest firm that still goes belly-up if they do not have the capital to write that check to cover client losses.
You need a broker with deep pockets. I never liked the business. It was a shotgun wedding to me without the plus-side. The dramatic move overnight in the Euro/Swiss was simply catch-up. This was enabled by the press being politically-correct and not calling the politicians to blame for the mess they have made out of creating the Euro. Brussels will hold on to this currency until they have bankrupted everyone else because if they let the Euro go, there goes their jobs. The press is protecting government and has reversed its entire focus of securing our liberty as the check and balance against government.
Looking At Things Globally – Moving Beyond Human Intelligence
Here is gold in British pounds. You will notice that there is no real nice V bottom. Gold in pounds is still crawling along support. This implies two possibilities. First, new lows for gold lie ahead and two, the British pound will also rise against Euroland. Europe appears to be the real disaster that sets in motion the economic collapse post 2015.75. If you have loans, convert to Euros. You may see them almost halved in the future.
Now look at gold in Euros. Here we see the V bottom. This was warning that either gold bottomed or the Euro peaked. When we reviewed the former, it became clear that it would be the latter. Therefore, this too confirmed the Swiss peg would break.
Now look at gold in Swiss. We see a nice V top and we see gold breaking to new lows. This also confirmed that the Swiss peg would break. To send gold down sharper in Swiss meant the currency had to rise. It is nice to get away from mainstream press who propagate official propaganda and harm society keeping us trapped within what government wants (politically correct). We have to get away from their holding us back and filling everyone’s head with nonsense that does not work. Then we have to deal with the lawyers and academics. They were wrong. Really wrong. All they try to accomplish is to manipulate us to create a world they control.
Socrates is looking at absolutely everything in every currency. This is far beyond Artificial Intelligence just trying to match what a human can do. Socrates has surpassed what human analysis is even capable of doing. This is just a tiny glimpse of the real world. It is the way of the future. All we have to do is replace the lawyers and academics who rule the world and just maybe we will stand a chance to take that small step forward for humankind.
One of our institutional clients perhaps put it best. OMG – you guys are 25 years ahead of everyone else. Lets hope it will be less than that – sooner rather than later.
Does the Model Change Its Mind?
The answer to this question is yes and no. There are two entirely separate forecasts TIME and PRICE. There are three markers in price with respect to the Dow – 18500, 23000, and then 40000. The earliest time frame was 2016. There is no guarantee that we will see the 40000 level. This is why we have to follow the numbers. It is always a IF – THEN – ELSE issue for both TIME and PRICE must agree. If we reach the end of the cycle and it has only reached 23000, then that is it. If we exceed the 23000 level PRIOR to the end of the cycle, then the 40000 target becomes possible.
Understanding that these are two entirely different models enables us to watch how everything unfolds. This is why I say I am personally ambivalent toward what price level we reach. I go with the flow. This is not about right or wrong. The market is never wrong – only analysts.
The model provides us with both the TIME and the PRICE. There are no guarantees as to when a price will be executed above or below the market. They are stress points so to speak within the fabric of the economic whole.
The important thing to grasp is how everything is connected. The hate mail I got about gold was unbelievable. Some even accused me of manipulating the world for when I was released then gold peaked. Nice correlation, but look at everything around you. Nothing but nothing can take place is total isolation for everything is interlinked. The Greece default began right to the day of Pi. The 2007.15 high picked to the day the peak in the real estate market took place that they called it“Armstrong’s Revenge”.
These things set in motion the trend so you could see gold moved into its phase transition ONLY post 2007.15 when the ECM turned down and peaked with the low in the ECM in 2011. That is when the Dow began to take off. Even Barronsreported that we were calling for new record highs almost tongue-in-cheek. We were correct on all these things ONLY because they are all connected.
The Swiss Peg failed because this is a series of dominoes. You cannot stop the events in motion. So the key here is understanding. The model focuses our attention. It approaches TIME and PRICE entirely differently. What keeps my interest is watching in astonishment how the world really functions. There is a third approach, which is PATTERN RECOGNITION. My personal goal is to write the code to merge all three and then see what happens. Perhaps then it will be able to definitively forecast everything precisely in a unified manner – my version of a Grand Unified Theory. That would be really awesome. I am not yet sure that can be accomplished. Nevertheless, it is my project in the spare time when I can find some.
The One World Currency & Cryptocurrencies
QUESTION: Hi Martin,
I’ve never bought any cryptocurrencies, and I understand and agree with your view on cryptocurrencies like bitcoin. Am I correct in my interpretation of your theories to believe that the ideal scenario is a world reserve currency that is not attached to any single nation? Is this even possible?
Even though the flaws in cryptocurrencies are readily apparent, I still can’t help but find the idea fascinating. I’m wondering what your views on a TRULY anonymous digital currency would be. I’ve recently been studying “darkcoin” which has the unique ability to completely obfuscate the transactions themselves so that they can’t be traced back to an individual. As far as I know this is the only cryptocurrency that has the potential for truly anonymous transactions and transaction history built into it. From the perspective of anyone who feels they’re being taxed to death this represents inherent value, something no other digital currency has.
If bitcoin gets out of control then all the government has to do is trace the transactions and persecute the individuals, but with darkcoin they would be forced to take drastic measures like using an internet kill-switch. If darkcoin were to become as popular as bitcoin, would it not force the hand of government and therefore reveal their true intentions? Could cryptocurrencies serve as light to shine on the emperor’s lack of clothes, and maybe even prove to the public that there is a need for a decentralized world currency?
ANSWER: A one world currency seems to be the only POLITICAL solution. No single country’s currency can really be the reserve for what happens is clear right now. The US lowered it rates to fight the banking crisis and that began a contagion externally. Whatever the US might do with respect to monetary policy for its own economy cannot be isolated purely for domestic use. Hence, QE1-3 produced no domestic inflation because the deflation was global and the money was absorbed externally. If the dollar was not the reserve currency, then that policy would have produced inflation as the Austrian School taught. That principle does not apply to empires whose currency is used externally.
The entire problem with cryptocurrencies is the fact that government has always profited from creating money known as Seigniorage (“right of the lord (seigneur) to mint money”). Illustrated here is a British protest note. The king passed a law that anyone passing a counterfeit note was to be sentenced to death. Innocent people were being hanged for simply possessing such a note. They were duped themselves and it cost them their lives. This note protested the sentencing of people for possessing such a note rather than those who produced the counterfeits.
I find it hard to believe that government will allow private currency in any fashion. They lose taxes and profit. Seigniorage has always been the privilege of the lord since 600BC. I remain skeptical about government accepting private currencies based solely upon history. Governments will turn against them most likely after 2015.75 when they become really desperate for cash.
The Petro Dollar is Dead – Long Live the Dollar
QUESTION: Martin,
I have a friend who is concerned about the impact of Russia’s breaking with the petro dollar. I explained to him your point that trade is a small piece of the world economy and that the dollar (which is really the U.S. debt market) is still the only market large enough to absorb world reserves, and that is why the dollar is king.
However, I would also like to hear if you have any other thoughts & forecasts on the petro dollar.
-DB
ANSWER: This will have no impact on the dollar short-term. The real importance here is the setting of the stage for the one-world reserve currency. To reach that point, what we need is a strong dollar rally that will hurt the world economy significantly forcing political change. This is ripe for Obama has done far more to destroy the integrity of the United States than anyone could have possibly imagined. In just 3.14 years, he wiped out decades of peace and reignited the cold war. He loves to play golf costing the taxpayer tens of millions of dollars for each game and has missed more morning briefings than the last 10 presidents combined. Nobody could have possibly set the stage for the collapse of US power more so than he has done. Then and only then will we move to solve that problem with a replacement for the dollar. Obama and the NSA have set the stage for changing the monetary system.
So the resistance toward the dollar is there waiting in the wings. However, this will not prevent the rally near-term in the dollar. It is illustrating that eventually we will abandon the dollar as the reserve currency and the botched job creating the Euro has also contributed to setting this trend in motion. Displacing the dollar takes decades to accomplish for it is one domino at a time. Such profound changes to the world monetary system are not accomplished overnight. It took 26 years to wipe out Bretton Woods. From 1971, it was 26 years to the start of the Euro and the Asian Currency Crisis. We should see the dollar displacement by the peak of the next 8,6 year wave.
You can see the one-world currency coming – it’s just not ready this instant. It will be the solution they choose. Even the IMF is planning meetings on the SDR guess when? Around 2015.75.